Responsibility and commitment

GF has been recording and analyzing environmental indicators since
1997. The global reporting system was upgraded in 2005 to include
social performance data and was expanded into the Sustainability
Information System (SIS). Various documents, for instance the Code of
Conduct, support mainstreaming and implementation in the 31 countries
in which GF operates.

Objectives //

The currently applicable sustainability objectives were adopted by
the Executive Committee and cover the five-year period from 2010 to
2015. Objectives for the next period until 2020 are developed by top
management in 2015. At the operational level, the divisions and the
Corporate Companies derive their environmental and social objectives
from these quantified targets valid throughout the Corporation.
Achievement of the targets is monitored by means of a corporation-wide
reporting system. The environmental goals include, for instance, a
reduction in CO2 emissions and an improvement in energy
efficiency. The social responsibility targets encompass a reduction in
the accident and absence rates and the fostering of employee
development by means of modern training programs. The general
sustainability objectives also call for sustainability aspects to be
embedded in GF’s cooperation with suppliers (GF Supplier Code). GF
published its full Sustainability Report with extensive data in June
2014. The report is made in accordance with the GRI guidelines (Global
Reporting Initiative).

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Social objectives

Safety at work and health protection //

Occupational health and safety protection are part of the management
system in all production companies and the system is certified to
OHSAS 18001 (Occupational Health and Safety Assessment Series). One of
the sustainability goals defined by the Executive Committee is to
reduce the accident rate by 15% by 2015. On corporate level, a task
force focuses on a comprehensive health and safety approach covering
all GF sites worldwide. Even though GF’s occupational health and
safety activities indicate a decrease in accidents, sadly, GF had to
regret one fatal accident in 2014. The accident was analyzed in detail
and actions will be taken to maximize safety around the entire
Corporation. Every loss of life is a loss too much and cannot be
accepted.

On corporate level, a task force focuses on a comprehensive health and safety approach covering all GF sites worldwide.

Vocational training //

Apprenticeships have a long-standing tradition at GF and ensure that
the Corporation can draw on a skilled workforce. GF offers a broad
range of training opportunities spanning a variety of technical and
commercial professions. In 2014 GF offered a total of 506 positions,
of which 209 were in Switzerland, for training apprentices in various
technical or commercial professions.

Graduates //

GF offers career entry routes through thesis projects and
internships. In addition, GF collaborates on numerous research and
development projects with the key universities located in the main markets.

Management development //

In 2014, GF was able to fill around 50% of all senior management
vacancies with internal candidates. This is the result of the
Corporation’s management development process, which has been very well
established for some years now. As well as technical and management
training, the three divisions offer training programs geared to
operations. The GF Academy makes a significant contribution to the
efficient organization of training by preparing and conducting
development programs. Furthermore, in the review year, some 200
managers from many different countries and all areas of the
Corporation attended intensive training sessions at the Corporation’s
Klostergut Paradies training center. These sessions included, for
example, Industrial Business Training (IBT), Financial Management
Training (FMT), People Management Training (PMT), and Corporate
Management Training (CMT).

In addition, a Corporation-wide initiative on
management issues and collaboration – based on programs
developed by Franklin Covey – was implemented. These training
courses are aimed at managers and employees from all divisions.
The three divisions also conduct their own training programs that
are geared specifically to the operations of their business areas.
There is a particularly strong demand for skilled staff in the
People’s Republic of China. As the country’s labor market is
highly competitive, the GF Academy pays particular attention to
developing managers. In fact, it has been offering appropriate
management and leadership training courses in China since 2007.

Pay and social benefits //

In 2014, GF generated net value added of CHF 1.22 billion. About 81%
of this amount was paid out as salaries to employees. GF operates a
fair, modern, and transparent remuneration system for employees,
without discrimination. Salary levels are based on those being offered
in the relevant market and individual salaries are set according to
job requirements, personal performance, and the company’s financial
performance. Where appropriate, GF offers a performance-related
variable component and allows employees to share in the Corporation’s
success. Excellence on the part of individual employees and teams is
recognized and rewarded. In addition, GF offers the usual social
benefits customary in the respective country and industry.

Information //

Sustainability issues are regularly dealt with in Globe, GF’s
employee magazine, which is published in six languages. This ensures
that information on sustainability trends in society and associated
activities at GF is communicated to staff members in full. Moreover,
larger sites also produce their own publications, which are regularly
distributed to all staff. In order to communicate with the online
audience, GF is present on social media channels since 2013. Regular
posts provide insights into the world of GF and sustainability
activities within the corporation.

Best-practice exchange to strengthen sustainability management //

Last year, around 150 managing directors addressed fundamental
strategic and operational issues at specialist conferences. Senior
management meets annually at the two-day Corporate Conference and at
regional managing director meetings. These conferences deal with
strategic and financial management issues as well as with specific
human resource management topics. The two-day sustainability
conference, which takes place annually in Europe, and biennially in
China and the USA, focuses on a cross-divisional dialog. In 2014, this
conference was held in Schaffhausen, Switzerland, and Easton, USA.
High on the agenda were current sustainability issues facing the
Corporation and its divisions, in particular occupational safety and
health and as regards the environment, energy efficiency. HR managers,
occupational safety and health protection specialists, energy experts,
and environmental officers from regional Corporate Companies attended
the conference.

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Environmental objectives

Energy //

The challenges of the future include climate change, the inite nature
of fossil fuels, and a steep increase in the demand for energy. In
2013, GF generated about 713 000 tons of CO2 emissions of which fossil
fuels accounted for 250 000 tons and electricity for 455 000 tons.
Compared with the emissions from energy consumption in production,
emissions caused by employee business travels are around 8 000 tons.
The figures for 2014 will be published in the Sustainability Report
2014.

Energy effiency //

Fossil energy will be among the most important and ever-diminishing
resources in the coming decades. Consumption is steadily increasing
particularly in the emerging markets. GF has set itself the goal of
increasing energy efficiency in production in each division by 10%.
All the divisions of GF are developing innovative solutions such as
low-efficient piping components, light-weight components for vehicles,
and energy-efficient tool-making machines. In addition, all the
divisions contribute, through their products and solutions, to
increasing energy efficiency and to lowering energy consumption. For
instance, low-optimized piping components can reduce the pump input
power needed in a plant. Further power consumption reduction is
achieved through an intelligent machine software optimizing power
consumption during operating and stand-by modes.

Resource-efficient innovation //

Important resources are also becoming scarcer and more expensive. As
a result, the development departments have introduced processes for
resource-efficient innovation (eco-design, life cycle assessment).
These processes help ensure that product-related sustainability and
resource efficiency issues are taken into account as early as the
development stage of new products. Developers have to take the
product’s entire life cycle, and not just the development phase, into
consideration. The impact of new products on the environment is
analyzed by assessing the raw materials and suppliers selected,
production, the customer’s use of the products along with their reuse
once their life cycle has expired.

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Engagements

Clean Water //

In 2002, on the occasion of its 200-year anniversary, the GF
Corporation established the Clean Water foundation, endowing it with
CHF 3.5 million. Since then, GF provides the foundation with a
considerable amount each year. To date, Clean Water has supported 124
projects worldwide with over CHF 8.5 million and has improved the
lives of more than 140 000 people with a sustainably improved access
to clean drinking water.

To mark the foundation’s tenth anniversary in 2012, GF and Caritas
Switzerland signed a partnership for the supply of drinking water.
Clean Water contributed CHF 1 million for this purpose, which will
enable Caritas to provide at least 35 000 people worldwide with a
sustainably improved access to clean drinking water by 2015. Within
the scope of the partnership, GF Piping Systems supports Caritas with
know-how and expertise in the field of water treatment and
distribution. The objective is to noticeably improve the access to
drinking water with help of innovative methods.

In 2014, the Board of Trustees approved eight new
projects in Ecuador, Kenya, Nicaragua, Tanzania (two projects),
Tajikistan, Somaliland, and Bosnia-Herzegovina in the amount of more
than CHF 500 000. The region Balacici in Bosnia-Herzegovina was hit
by heavy loods in 2014. Employees of GF Automotive in Mettmann
(Germany) supported reconstruction efforts with EUR 5 000 as part of
the German aid campaign “Deutschland Hilft”. Clean Water also
donated CHF 50 000 to rebuild a water reservoir that provides 140
families with drinking water. The necessary geological studies have
been completed and construction will begin in spring 2015. Follow
the reconstruction online: www.caritasprojectbosnia.wordpress.com

Clean Water has supported 124 projects worldwide with over CHF 8.5 million and has improved the lives of more than 140 000 people.

Contributing to the common good //

Through its fundamental values and corporate principles, GF is
committed to promoting cultural, social, and environmental
involvement. To this end, the Corporation and Corporate Companies are
locally involved at their respective locations. In 2014, around CHF 2
million were spent at Corporation level on social involvement
activities. In addition to this, some 30 GF subsidiaries support local
activities, making substantial contributions in some cases.

Stakeholder dialog //

Management responsibility and active, open, and timely communication
– with internal and external stakeholders and at various levels – are
inseparably linked. GF fulfills this duty to inform and communicate
primarily through its Communications and Investor Relations staff
units. The Annual Report, Mid-Year Report and Sustainability Report
are the main printed publications for shareholders, investors, and the
general public. Whenever possible and permissible, employees are being
notified first. As a company listed on SIX Swiss Exchange, GF is
subject to the requirements on ad hoc publicity. Making sustainability
and resource efficiency the subject of an ongoing dialogue is entirely
in the interests of GF customers, too. After all, to be considered as
a supplier, evidence of sustainability in production is a key factor
alongside technology, quality, and price. In addition, sustainability
aspects in working relationships with suppliers are defined in a
Supplier Code. In November 2014, GF was again invited to the “Daimler
Sustainability Dialogue”, in Stuttgart (Germany), where stakeholders
from business, politics, and society discussed sustainability issues.

Awards //

GF regularly receives awards for its unwavering commitment to
sustainable practices. For the third time, GF was awarded with 95 out
of 100 points, and was the sector leader in the Carbon Disclosure
Project (CDP) in 2014.

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Tools and systems

Management systems //

At GF all production sites have to be certfiied according to ISO 9001
(quality management), ISO 14001 (environmental management), OHSAS
18001 (Occupational Health and Safety Assessment Series) and where
applicable to ISO 50001 (Energy Management System). As at 31 December
2014, 46 of 51 earmarked sites had been certified, equating to 90%.
Newly established or acquired manufacturing companies must have
obtained certification after three years at the latest.

Reporting systems //

The systematic recording of sustainability figures, which was
initiated in 1997, is carried out by all production companies and by
all sales companies with more than ten employees. In the year under
review, 98 operations, or close to 100% of all employees, were
covered. The Sustainability Information System (SIS), which has been
steadily upgraded over the years, ensures that the data are compiled
and that they are comparable Corporation-wide. Trained employees in
the local companies collect and report the data, which are then
consolidated and analyzed in the central database. The findings form
the basis for monitoring success and for sustainability reporting and
also serve to formulate future objectives. The social reporting (e.g.
accident rate) covers approximately 99% of the workforce and an
estimated 95% of its environmental footprint.

Corporate compliance //

Compliance with laws, internal guidelines, and the GF Code of Conduct
is a key part of GF’s corporate culture. Organizational measures,
training plus information and advice ensure that the Corporate
Companies are able to comply with local legislation and the principles
of business ethics applicable in the Corporation The Corporate
Compliance Officer reports annually to the Executive Committee and
Board of Directors on his activities.

Internal Auditing verifies compliance with the applicable laws,
guidelines, and ethical business requirements. If they wish, employees
can also report breaches of laws or guidelines to their line managers,
Internal Auditing or the Compliance Officer anonymously. This
whistle-blowin option has not been used over the last two years.

For more information on the certified production sites of GF
please see page 41 of the Business Report 2014.